Work and amenities are close, you have good transit options — do you really still need that car?
A lot of advisers say no. After shelter and food, transportation is the third most expensive cost for Canadians, Statistics Canada confirmed. Ratehub found that, over nine years, car expenses can total more than $139,000. That figure was calculated before gas prices surged. What else could you do with that money?
On the other hand, if you give up your car, there are limitations and new costs to consider.
Mark Lotocky, owner and financial planner at The Dixon Davis Group, a fee-only financial planning firm in Victoria, lived car-free from 19 to 35 years old.
“I basically lived in a transit- and biking-friendly space for essentially all my 20s and into my mid-30s,” Lotocky said. “It is possible, and it is a great thing. I loved it.”
The costs show up anytime you leave that transit network, he said: taxis, ride-hailing, rentals, car shares and co-ops. He likened car ownership to an “experience” cost, because you can drive out of the city, visit family or friends, have day trips or road trips. Emulating that lifestyle without owning a car will rack up new expenses.
Depending on how often you want to leave the city, Lotocky said giving up the car is still worth it. He would use a car share company to visit a friend who lived one hour outside of Victoria, but only a few times a year.
“The cost to me was probably $85 to $90 to go up for the night, which is expensive, but also a lot less expensive than a car,” Lotocky said. He added you can also borrow cars from family and friends, and give them some cash in return.
Is your car paid off? That’s the first question Janet Gray, an advice-only financial planner with Money Coaches Canada, would ask.
If it’s not paid off, and you owe more than the vehicle is worth, selling the vehicle means still paying the debt for a car you no longer have.
Gray had a recent consultation with a young woman who couldn’t afford her car payments after 15 months — but a new car’s value depreciates quickly, and her remaining loan was more than she could sell it for.
Depending on your financing terms, it can take two to four years to reach positive equity on a new car, which means you could sell the car without losing money.
Next, Gray would ask about the commute. Gray lives in Ottawa, and said living outside the general city core can mean excessively long commutes on transit. Caregiving and work requirements are also major factors.
“You’ve seen parents that are struggling on transit with strollers and … that wouldn’t work for everyone,” Gray said. “Also depending on their job, right? If their job requires them to be on the road, or if they are caregiving, either a parent or a child, then a car would be totally helpful.”
But without those needs, the value of keeping a car diminishes when tallying up maintenance, repairs, parking, insurance and especially gas.
“A paid-off car is nice until all of a sudden you have to fix the brakes. Have you ever fixed the brakes on your car? It’s easily $2,000,” Gray said. “As the car gets older, maybe you have no payments, but now you have more repairs.”
Try a test run of living car-free, Lotocky said. Park the car somewhere and use alternative ways to get to work and run errands. Tally up the costs of other types of transportation. Give yourself six months and track the numbers against how much it costs to keep a car.
“What it really comes down to is the experience,” Lotocky said. “What are the experiences you get with the car, and what are the experiences you get without a car, and saying: ‘Is that cost worth it to me?’”
Even if having children is part of the five-year plan, Lotocky said it still makes sense to sell the car now and buy again in the future. The carrying costs over those years, especially for paid parking or storage, drain your finances.
Keeping the car just in case can also become a self-fulfilling prophecy, Gray pointed out. There’s a “behavioural drift” of having a car, where you end up using it just because you have it.
If you decide to give up the vehicle, beware the lure of extra cash in your monthly budget — likely hundreds of dollars.
For younger people, Gray said these savings should be funnelled into an emergency fund and a tax-free savings account. She’s not enthusiastic about RRSPs at this life stage, since income is likely lower and it makes more sense to max out RRSPs later when you are earning more.
Wherever you put the extra money, ensure you give it a purpose and stick with it.
“If people don’t have a car payment, it takes conscientiousness to set aside that cash because they’re just going to expand their lifestyle — ‘I’ll go out for dinner four times a week’ and ‘I’ll travel a lot more’ so they’re not actually making the savings,” Gray said.
“It really takes that conscientious decision to shoot that money into a savings account and say, ‘I’m not going to touch it because that is for a purpose.’ But until they have a purpose defined, it just becomes lifestyle expansion.”
This report by The Canadian Press was first published April 21, 2026.
